Mandel and Keynes

Before turning to the question of how Mandel differs radically from Keynes, I want to supply some background information on Ernest Mandel.

Mandel was one of the most respected Marxist economists in the world, who died on July 20, 1995. In addition to his theoretical work, he was also a leader of the Fourth International. Along with CLR James, he will be remembered as one of the most powerful thinkers to come out of the Trotskyist movement.

Of Jewish origin, he was recruited to the Belgian Trotskyist movement by Abram Leon, the author of "The Jewish Question." Leon had broken with radical Zionism and become the leader of the Belgian Trotskyist movement. He was arrested by the Nazis and died in a concentration camp. Mandel, also part of the underground, was arrested as a teenager while distributing socialist leaflets to German troops. He managed to survive incarceration.

Mandel came to the United States frequently in the late 60s and early 70s until the State Department decided to ban him as a dangerous subversive. A big defense campaign was waged on his behalf and he eventually was allowed to enter the country once again. Mandel divided his time between speaking to huge audiences at places like Harvard or Berkeley and addressing internal meetings of the Trotskyist movement. I used to attend both kinds of meetings. The Trotskyist movement eventually split in the 1970s over differences on guerrilla warfare. Mandel was friendly to Guevarism, while the SWP defended Bolshevik "orthodoxy." Mandel was more correct than the SWP, but did not go far enough.

My knowledge of Marxist economics is based almost exclusively on my reading of Mandel's work from the late 60s and early 70s. It is also supplemented by study with Dick Roberts, who was the house economist of the SWP and very close to Mandel theoretically. Roberts was one of thousands of people who went through the revolving door of American Trotskyism. A trust-fund alcoholic, he eventually dropped out of the party and gave up booze. He also gave up socialism and is now a devout Christian. The main focus of Mandel and Roberts was on the correct way to understand capitalist prosperity and its underlying contradictions. It was extremely necessary for us to have such an understanding, because otherwise it would be very disorienting to believe in the need for revolution while everybody around us seemed so content, at least on the material level.

Mandel's theoretical work was very much tied up with diagnosing the nature of the capitalist system following the end of WWII, when it seemed to defy everything that Marx wrote about it. Of course, most of the bourgeois opponents of Marx misrepresented what Marx said. Marx did not predict, as Professor Mike wrote here the other day, that there was an "inevitability" for the system to self-destruct. This straw-man is easy to knock down. What Marx wrote, and what Mandel spent his entire career explaining, is that capitalism is a contradictory system which can only resolve its contradictions through violent and barbaric measures. It would never "self-destruct." Instead it would condemn humanity to global economic inequality, periodic depressions, wars and fascism in order to resolve its own contradictions. We would pay with our own blood for capitalism's tendency to fuck itself up, a prospect that is staring us in the face now.

Now to answer Rakesh's claim that Mandel made concessions to Keynes. Rakesh believes that the following is evidence of such a concession:

"A further important factor should be borne in mind, which has to some extent been correctly pointed out by the Keynesian school. Money as purchasing power of monetarily effective demand should not be compared exclusively with the ongoing flow of commodity production; for it also has a mobilising effect--in other words, it can restore fluidity to a given stock of commodities. This function is especially important in a crisis of overproduction." (Late Capitalism, p. 419)

Nothing can be further from the truth. Mandel is not endorsing deficit spending or any other Keynsian measure. He is simply taking note that the bourgeoisie utilizes such measures in a "crisis of overproduction," obviously like the one we are facing now.

What is important to understand is that Mandel wrote these words in a chapter titled "Permanent Inflation" and that he was simply trying to show that while deficit spending was an attempt to resolve capitalist crisis, the underlying contradictions could not disappear, but only reappear at a higher level. A sentence from the concluding paragraph of the chapter should dramatize how futile such measures appeared to Mandel: "The rate of the permanent inflation of late capitalism in concealing the decline of commodity values, facilitating the accumulation of capital, disguising the rise in the rate of surplus-value and TEMPORARILY solving the difficulties the difficulties of realization by its extension of credit, thus ultimately encounters IMPASSIBLE limits." (p. 457, my emphasis)

It was a very difficult job Mandel had on his hands. How could one defend classical Marxism when we were living in an "affluent society" and one in which Keynes was accepted by liberals and the conservatives alike. Didn't Keynsianism seem to have the answer to the problems of capitalism? Just supply a little deficit spending when the economy was in a slump. It didn't matter if the money was allocated for bombers or for schools, although historically it did end up in the Pentagon budget rather than HEW. Mandel had a good analysis of this in "Late Capitalism" in the chapter titled "The Permanent Arms Economy and Late Capitalism." He argues, "The whole phenomenon of the permanent arms economy vividly highlights, of course, the parasitic nature of monopoly capitalism, already exposed over half a century by Lenin in his analysis of imperialism. For how else can one regard a system which for 25 years has constantly squandered such a substantial part of its available economic resources on the production of the means of destruction?"

One of the things that Mandel did not pay close enough attention to was the fall of Communism. Mostly he wrote about it from a political standpoint. He was interested in drawing a contrast between his own movement and tendencies like Eurocommunism or Gorbachevism. This was taken to sometimes sectarian extremes such as on the occasion of a debate on the Soviet Union at a Socialist Scholars Conference before Yeltsin's takeover. Paul Robeson Jr. tried to convince the audience that Gorbachev would usher in a new era of prosperity and democracy, while Mandel practically had a fit in response to this. He called, as one might expect, for proletarian revolution led by a Leninist-Bolshevik party. Not that this would be a bad idea, but like most calls from Trotskyists on this score, what is lacking is the steps necessary to make this happen. That's the hard part.

Perhaps Mandel was too politically and intellectually exhausted to do the analysis. But if anything is clear, looking back in retrospect, it is that the fall of Communism was simply a response to the deepening contradictions of capitalism in the 1980s. Japan and West Germany had fully recovered from WWII and now faced the United States as powerful rivals. Japanese and German automobiles were flooding into the United States and unemployed workers might decide to use a sledge-hammer against federal buildings, once they got tired of bashing Toyotas in effigy.

Capitalism beat down the door of the USSR and China in order to open up vast new areas for investment and the extraction of raw materials. This rosy scenario seemed to pay off initially as Chinese workers were drafted to make Nike sneakers for coolie wages. The only problem, however, is that the addition of these economies into the world-system exposes it to political shocks if the system can not deliver on its promises. A billion Chinese and hundreds of millions of Russians have memories of economic security. If they get neither economic security, nor plentiful consumer goods, there will be a lot of pissed off workers and peasants. They, like the Russian coal-miners, might decide that any system is preferable to capitalism. There's a good chance that socialism would get a hearing.